The pace and scale of change is unprecedented... We recently held our FutureWorks Global Employer Forum in London to discuss the megatrends that will impact global businesses and the future of work. Together with HR and employment leaders from some of the most innovative companies in the world, as well as leading academics and thinkers, we looked at how global employers can embrace the opportunities and manage the coming shocks. Here we share highlights from our two days together.

Baker McKenzie Global Employer Forum 2017 | 1 As our host and keynote speaker Professor Ian Goldin noted, the pace The FutureWorks agenda: and scale of change affecting all of us is unprecedented since the NEW ERA Renaissance. For this year’s FutureWorks event in London, we looked at the large-scale trends that will change our world: high birth rates in A second Renaissance? Risks and rewards in an age of discovery. developing markets, an aging population in the West, climate change Is the world flat? Globalization, talent and the dominance of cities. and the power of place. We also explored the changing nature of work itself: the rise of Is the employer-employee relationship over? The new talent exchange. contingent workers, increased demand for flexible working, changing skills requirements and talent pools. We heard how companies are NEW ACTIONS adapting their strategies to engage diverse talent and unlock future productivity. Findings from the World Economic Forum’s study, “The future of jobs.” Finally, we considered how new from machine learning to Do businesses need a social license to biomedical enhancements are transforming the workplace and raising operate? New era, new actions. Is a new global diversity mindset ethical questions of their own. essential to the future of work? Diversity and inclusion strategies to These disruptions pose significant challenges. However, we live in an drive innovation. exciting time full of opportunities. Together, we can come up with answers for the big social, environmental and economic challenges of NEW our time and prepare our organizations to thrive. Are you bridging the digital generation gap? Talent in the digital world. GUENTHER HECKELMANN Just say no to drugs? Biomedical enhancements at work. Partner, Global Chair, Employment & Compensation Group, Will machines rule the workplace? Baker McKenzie (AI), bots and future skills.

Baker McKenzie Global Employer Forum 2017 | 2 NEW ERA

Our world is interconnected. Six billion people own a smart device. Around 70% of the world’s population lives in a city or within one hour’s reach of a city. Companies and We are all connected. The challenge is not how to individuals are discovering new ways to work together. Our FutureWorks program disconnect but how to build resilience. looked at the opportunities and risks of a new era — the megatrends that will affect global business and where and how we work. Professor Ian Goldin, Professor of Globalisation & Development, Oxford University

A second Renaissance? We began our FutureWorks Forum with a keynote address from Ian Goldin, Professor of Globalisation & Development at the University of Oxford and former Vice President of the World Bank, examining the megatrends shaping our collective future: shifting economic power, changing demographics, disruptive technologies and systemic risks. The extraordinary growth of the past 30 years is due to unprecedented globalization and accelerating . The speed, scale and complexity of this integration have far-reaching implications for business and individuals and are dramatically changing the nature of work and employment relations. The drivers of global growth are changing — emerging markets are likely to continue to grow at high levels in the coming decades. Rising life expectancy and collapsing fertility around the world will have dramatic consequences for pensions, retirement and employment patterns. Meanwhile, advances in artificial intelligence and are transforming the nature of work and have the potential to replace significant numbers of jobs and widen inequality. Globalization spreads not only opportunities but also creates systemic risks. Pandemics, cyber attacks, climate change and financial contagion are among the systemic risks increasing uncertainty. This is associated with growing extremism and a rise in protectionism and nationalism which threatens to reverse integration and globalization.

The pace of change is accelerating and so are the uncertainties.

Baker McKenzie Global Employer Forum 2017 | 3 Factors that will impact tomorrow’s HR and legal policies:

Economic and New technologies: Shifts in relationships Migration and Shortages of new skills, Inadequate demographic trends: between employer mobility: too many old skills: governance: and employee, between governments and citizens, between generations:

In the West, the median We are interconnected Inequality is rising as Cross-border and intra- Studies suggest that There is no suitable age of the population and dependent on economic benefits are country migration has with the onset of global governance to is rising, so the elderly technology more flowing to cities, to fuelled innovation. Half machine learning, we manage the challenges will own more assets than ever, but this global corporations and of all new US patents will delegate most arising in this new era. and have a greater say can be turned against to older generations. are awarded to first- computational tasks to in politics. At the same us – cyber risks and or second generation computers, while time, global economic pandemic diseases are immigrants to the judgement, wisdom growth rates are real risks. country. and intuition will be the expected to be highest on-demand skills of the in China, East Asia and future. India – this will shift economic power to the East.

Baker McKenzie Global Employer Forum 2017 | 4 Is the world flat? To do the most imaginative, thoughtful work, Thomas Friedman and others have argued that the world is becoming flat, with globalization and new technologies connecting knowledge pools and resources around you need “thick” ways of working. Somewhere the world. We are seeing the tremendous benefits of this connectivity — companies teams can come together. can draw on international talent, and individuals have the flexibility to work where and when they want. Charles Leadbeater, author, thinker and strategic adviser on innovation At the same time, location and place matter. The share of the world’s population living in urban areas, just 3% in 1800, is now 54% (and expected to increase to 66% by 20501). Companies also continue to see the benefits of bringing people together, with many investing in new spaces in major cities to attract talent and encourage collaboration. These more unstructured and dispersed ways of working will require HR and business leaders to address new challenges, including how to instill company values and culture across locations, and how to build effective teams with employees and workers who may never meet in person. Teams want psychological safety, regardless of where they work.

Is the employer-employee relationship over? The war for talent is over. The employee won. Globalization and technological forces are disrupting traditional work models. The job-for life-model is over, and non-standard employment has become a feature of labor markets They demand from us the same level of choice around the world. and service as they do as consumers. Millennials Between 2005 and 2015, all US job growth was in temporary, part-time, freelance, are less interested in pensions and other benefits and other “contingent” work. Workers from all manner of industries, skill levels, and geographies are enjoying more creative working models. Employers searching for talent like equity or stock options. They value choice, will need to think more broadly about their workforce and come up with new strategies to autonomy, growth and purpose. attract and manage workers who are not their employees. Nate Boaz, Senior Managing Director for Talent Strategy Similarly, employees are switching jobs more often, making it difficult to build a stable and Leadership Development, Accenture talent pipeline. HR leaders are looking at new ways to build loyalty, from flexible working and leadership opportunities to strong values and a sense of purpose. People want a common purpose, regardless of whether they are permanent employees or contingent workers.

Baker McKenzie Global Employer Forum 2017 | 5 NEW ACTIONS

The increasing complexity of our world will demand new actions from business. Change in demand for core work-related skills, 2015 - 2020, all industries Shifting employment patterns, including changes in types of jobs and skills Share of jobs requiring skills family as part of their core skill set required, are requiring companies to take an active role in upskilling current workers and preparing the next generation workforce. Demographic and socio- economic drivers — climate change, resource constraints, inequality, longevity Scale of skills Current and aging societies — are compelling companies to take a more proactive demand in 2020 2020 approach to solving the world’s biggest challenges. And workforce strategies Cognitive abilities 15% 52% to address diversity and the gender gap will become even more critical to business success. Systems skills 17% 42%

Complex problem solving 36% 40%

Do we need a new kind of workforce? Content skills 10% 40% Technological, socio-economic and demographic trends are converging to Process skills 18% 39% create new categories of jobs and to displace others. The landscape of skills requirements will also change significantly. Employers need to anticipate Social skills 19% 37% and prepare for these changes to help avoid massive unemployment and Resource management skills 13% 36% talent shortages. Data from the World Economic Forum’s The Future of Jobs report shows that while companies are aware of the coming challenges, they Technical skills 12% 33% could be doing more. Workforce strategies include investing in reskilling, targeting diverse talent pools (including women and older workers), focusing Physical abilities 4% 31% on upskilling current employees, engaging with educational institutions, and 020406080 100 collaborating with other companies within an industry or across industries.

Growing skills demand Stable skills demand Declining skills demand

By one popular estimate, 65% of children entering primary Source: Future of Jobs Survey, World Economic Forum school today will ultimately end up working in completely new job types that don’t yet exist.

The Future of Jobs, World Economic Forum

Adaptation is paramount across the global work landscape.

Baker McKenzie Global Employer Forum 2017 | 6 Do businesses need a social license to operate? You can feel social contracts being renegotiated day by day… Elected In 2015, all Member States of the United Nations adopted a 15-year plan to eradicate extreme poverty, foster human well-being and prosperity, and officials are not incentivised to think 10 or 15 years ahead. protect our planet. At the core of “Agenda 2030” are Sustainable Development Goals, which establish important targets for the international community on John Morrison, CEO, Institute for Human Rights and Business and author of ‘The Social License’ issues such as gender equality, decent work and good governance. Our panel explored why and how businesses are advancing these goals as part of their core strategies. While compliance is an important driver, increasingly it is the business that is pushing for change. By addressing labor and human rights challenges, companies can: If you smell smoke, there is a fire. Don’t wait till you see flames. • Manage stakeholder engagement • Protect reputation and brand image Brent Wilton, Director of Global Workplace Rights, Coca-Cola • Minimize legal liability • Improve employee relations and productivity • Create greater business value In the face of rising populism and accelerating change, the focus on businesses’ responsibility of securing social permissions to operate in their communities is Change is driven by the supply chain discussion and by representative likely to intensify. Transparency, accountability and stakeholder engagement bodies coming together. will become even more important. Social responsibility, diversity and inclusion are fundamental to any Linda Kromjong, Secretary-General, International Organisation of Employers (IOE) global people strategy at this time of accelerating change.

Baker McKenzie Global Employer Forum 2017 | 7 An increasing number of statutes and international standards are Recommendation of Committee of putting the spotlight on responsible supply chain practices: Ministers of EU States on UNGPs

National Action Plans: Chile/Columbia/ Malaysia/Mozambique/US/Europe

National-level reporting requirements: Denmark/France/Sweden/UK

Stock exchange listing requirements: India/Thailand

US Federal Acquisition Regulation Combating Trafficking in Persons

SEC Ruling on Conflict Minerals and Sec. 1504

EU Reporting Directive

Foreign Corrupt Practices Act UK Modern Slavery Act of 2015

Economic Extractives Industry Transparency Voluntary Principles on Security & California Transparency in Supply Initiative Human Rights Chains Act Environment Black Economic Empowerment ISO 2600 Social Responsibility Australian Carbon Pricing Scheme Social/Human Rights (South Africa)

General CSR BS OHSAS 18001 UN CEO Water Mandate UNGC Business for the Rule of Law Framework

ILO Declaration on Fundamental ISO 14001 Federal Contractor Executive Order Principles and Rights at Work

IFC Performance Standards v.1.0 ICMM 10 Principles IFC Performance Standards v.2.0

OECD Guidelines on Multinational UN Global Compact Global Reporting Initiative G3 Revised OECD Guidelines on Enterprises Multinational Enterprises 1980-1990 1990-2000 2000-2010 2010-2017

Baker McKenzie Global Employer Forum 2017 | 8 Is a new global diversity mindset essential to the future of work? Diversity and inclusion strategies to drive innovation. Pick a lane. Don’t use the breadth of opinions or the enormity The business case for diversity and inclusion for multinational of the task to allow inertia. Just start somewhere and do it companies has never been clearer. well. If you’re not sure, start with gender diversity. It will pay back in so many ways. Companies that exhibit Companies that exhibit gender diversity are ethnic diversity are Caroline Whaley, Co-Founder, Shine for Women

15% 35% Learn to listen. Know when someone is not saying something, and draw it out of them. more likely to outperform more likely to outperform those that don’t. those that don’t. Kirstin Furber, SVP People Director, BBC Worldwide

Source: “Why Diversity Matters”, McKinsey & Co.

As billions are invested in diversity and inclusion by global organizations each year, it’s important to take a step back and ask what strategies and initiatives are making the biggest impact. Put simply, what works? Our panel identified myriad ways for advancing diversity and inclusion:

Empower your employees. Give people permission to create their own inclusion initiatives. While commitment from senior management is paramount, it’s not everything.

Don’t try to do everything at once. If ethnic diversity is key to your business, start there. Or if gender equality is key to your brand, focus efforts there first.

Learn to listen. Create environments where different voices are heard and build on ideas.

Get creative. What may be labelled as a “pipeline challenge” may in fact be a matter of expanding your search outside of a traditional labor pool.

Rewrite the job description. By re-examining the actual needs of the position, it may be possible to appeal to a wider set of applicants.

Baker McKenzie Global Employer Forum 2017 | 9 NEW TECHNOLOGY

Are you bridging the digital generation gap? Here’s an example of creative thinking for recruitment. Snapchat applied Three types of digital natives are entering the workforce, who all use digital media differently. They are Generation Y (now aged 28-36), Generation C (now aged 23-28) and cheeky geofilters to tempt employees of rival firms to leave their jobs. This Generation Z (up to 22 years old). is a unique and playful form of recruiting. Companies are increasingly tapping into these different generations’ use of digital media to help them shape new and more imaginative recruitment methods. Technology is also Tiffany St James, Executive Director, British Interactive Media Association and CEO, St James and Partners enabling a more effective recruitment process.

We have replaced first-round interviews for graduates and interns with pre- Four approaches for you to strengthen your pipeline of future recruits: recorded video interviews. Through HireVue, we ask candidates pre-recorded questions, give them 30 seconds to compose an answer and up to two Dedicated social media channels Social listening Speak directly to the people who are interested Use tools to gauge what people are saying minutes to record it. The number of candidates we are able to assess has in your company, and take time to answer about you as an employer, and to nurture increased. Therefore we have broadened the talent pool from which we hire. their questions. This may reduce the volume your brand. Today’s recruits care about your of applicants, and those who do apply may be participation in the wider world. Janine Glasenberg, Executive Director – EMEA Talent Acquisition, Goldman Sachs more relevant to your needs.

Segmentation for the digital age Employee-led communications Psychometric profiling is important. This Your people are trusted more than We receive three million resumes per year. Up to a few years ago, we had might include passions, interests or creative advertising about what it’s like to work for recruiters spend at least five minutes reading every single one of those connections. your company. Find the best spokespeople, and nurture them as thought leaders. resumes. We now have machines in place that pull out relevant candidates with less risk of human bias.

Nate Boaz, Senior Managing Director for Talent Strategy and Leadership Development, Accenture

Be ready for privacy challenges. There is going to be an enormous backlash from consumers about the right Processes today may protect the individual from being identified — fractal interactions are designed to keep customer data anonymous. However, data mining is making it easier for to privacy. Get ahead of that. companies to join up data sets and make reasonably accurate identifications. John Morrison, CEO, Institute for Human Rights and Business and author of ‘The Social License’

Baker McKenzie Global Employer Forum 2017 | 10 Just say no to drugs? In high responsibility occupations, it may become When we’re sick, prescribed medication can make us better. When we’re tired, a strong coffee gives us an energy boost. a requirement to use cognitive enhancements. However, what about taking a non-prescribed medication, When lives are affected by decisions, and this to increase our alertness and performance? reduces variability or the risk of harm, then that Modafinil, an approved treatment for narcolepsy and other sleep disorders, is an example of such an “enhancer,” which would be the right thing to do. can be used to enhance attention, executive functions, Julian Savulescu, Uehiro Professor in Practical Ethics, University of learning and memory, according to Julian Savulescu, Uehiro Oxford, and Programme Director, Oxford Martin School Professor in Practical Ethics, University of Oxford, and Programme Director at the Oxford Martin School. Cognitive enhancers like this are going to present employers with considerable challenges. For example, how should employers handle the taking of such drugs in the workplace? Could excellent employee performance be attributable to an “enhancer” as opposed to hard work? If employees take these enhancers are they cheating? Biomedical enhancements will also present us with big ethical questions. For example, could the use of cognitive enhancements be seen as a moral obligation or even demanded by the public? Putting forward a very controversial perspective, Professor Savulescu asks us to rethink our perceived wisdom that drugs should be banned in the workplace. He argues that if there is no evidence of long-term side effects, it could be negligent not to use chemical enhancements to reduce human mistakes and errors, for example, in professions such as surgeons and pilots. When drugs such as Prozac2, Modafinil or Ritalin3 improve cognitive functions, the traditional conception of moral responsibility is turned on its head. This point of view raises huge ethical issues for all of us, not least because the possible long-term side effects of these products are not yet understood.

Baker McKenzie Global Employer Forum 2017 | 11 Will AI replicate or augment human intelligence? We have automated nearly 20,000 jobs on behalf of over 300 Despite fears that technological advancements will lead to widespread unemployment, that has not been the case historically. In 1900, for example, 40% of US workers were clients. Despite this, we have not laid off a single person. farmers and the national unemployment rate was 5%. By 1999, only 2% of US workers were farmers and the unemployment rate was 4.2%4. It’s unclear, however, whether this Nate Boaz, Senior Managing Director for Talent Strategy and Leadership Development, Accenture pattern will hold, with machine learning making it increasingly possible for machines to perform high-level cognitive tasks. Researchers at the University of Oxford previously predicted that 47% of jobs in the US5 and 35% of jobs in the UK6 were at high risk of automation, but research focusing on the impact on job tasks rather than whole occupations tells a different story. McKinsey estimates that while 51% of work activities At IBM, we talk about ‘augmented intelligence’ rather than in the US could be automated using current technology, fewer than 5% of occupations could be entirely automated7, while the OECD has found that only 9% of jobs on average ‘artificial intelligence’. It is about man working with machines could be at risk across the 21 OECD countries8. to enhance and extend human capability, expertise and In fact, while there has been a strong pattern through time for repetitive and potential, rather than trying to replicate human intelligence. routine tasks to be increasingly performed by machines, many new jobs are emerging. Deloitte9, for instance, is one of a number of commentators referring to the thousands Louisa Michelson, Counsel, IBM of new jobs being created every year in technology and creative occupations, business and professional services, and the caring professions. These jobs require manual dexterity or higher cognitive skills, such as those that depend on management and social interaction. There are certainly reasons to be optimistic and the fears that robots will replace all our jobs may have been overplayed. At BT, for example, customer services operators are teaching and guiding computers to help them separate simple faults from the more complex ones, and save time processing information. Accenture has also flipped the fear associated with this subject on its head by aiming to “elevate not eliminate” and “augment not automate.” This has helped to manage people’s anxiety, placing many of them in positions to manage automation or in positions with greater skills.

Many companies recognize that public confidence will be essential for these technologies to be fully deployed. At the World Economic Forum 2017, IBM’s CEO Ginni We have to be responsible parents of the technology. Rometty announced IBM’s principles for the cognitive era — purpose, transparency and skills — and recognized the company’s responsibility around the use and development Dr Nicola J. Millard, Head of Customer Insight & Futures, BT Global Services of AI and cognitive technologies.

Baker McKenzie Global Employer Forum 2017 | 12 Our values are the anchor. In the context of change, this is all we have.

Ian Goldin, Professor of Globalisation & Development, University of Oxford

Baker McKenzie Global Employer Forum 2017 | 13 We thank all our speakers for making FutureWorks such an insightful experience:

Charles Leadbeater, author, thinker and Dr Nicola J. Millard, Head of Customer Harry Armstrong, Interim Head strategic adviser on innovation Insight & Futures, BT Global Services of Futures, Nesta Mark Naidicz, Vice President Human Brent Wilton, Director of Global Caroline Whaley, Co-Founder, Resources, AbbVie Workplace Rights, Coca-Cola Shine for Women Nate Boaz, Senior Managing Director Janine Glasenberg, Executive Director – Dr Michael A. Osborne, Dyson Associate for Talent Strategy and Leadership EMEA Talent Acquisition, Goldman Sachs Professor in Machine Learning and Development, Accenture Co-Director of the Oxford Martin Rachel Burton, HR Business Partner, programme on Technology and Debbie Rice, Senior Director – Global Google Employment, University of Oxford Labor and Employment Law, Apple Kristin Major, Senior Vice President Ian Goldin, Professor of Globalisation & Kevin Coon, Partner, and Deputy General Counsel, Hewlett Development, University of Oxford Baker McKenzie Packard Enterprise Julian Savulescu, Uehiro Professor in Susan Eandi, Partner, Louisa Michelson, Counsel, IBM Practical Ethics, University of Oxford, Baker McKenzie John Morrison, Chief Executive, CEO, and Programme Director, Oxford Kirstin Furber, SVP People Director, Institute for Human Rights and Business Martin School BBC Worldwide and author of ‘The Social License’ Saadia Zahidi, Member of the Executive Tiffany St James, Executive Director, Linda Kromjong, Secretary-General, Committee and Head of Education, British Interactive Media Association and International Organisation of Gender and Employment Initiatives, CEO, St James and Partners Employers (IOE) World Economic Forum

1 World’s population increasingly urban with more than half living in urban areas’ United Nations Department of Economic and Social Affairs. Read report... 2 Prozac and Sarafem are trade names for Fluoxetine. 3 Ritalin is the common name for Methylphenidate 4 ‘Technology at Work: The Future of Employment’ presentation, Carl Benedikt Frey & Michael A Osborne – Oxford Martin School, University of Oxford. Read report... 5 Frey, C. B. and Osborne, M. A. (2013) “The Future of Employment: How Susceptible are Jobs to Computerisation?” Oxford Martin School Working Paper No. 7. Read report... 6 Deloitte report with Carl Frey and Michael Osborne: “Agiletown: the relentless march of technology and London’s response” London Futures, Deloitte LLP, November 2014. Read report... 7 ‘Harnessing automation for a future that works’ Michael Chui, James Manyika, Mehdi Miremadi and ors, McKinsey Global Institute (January 2017). Read report... 8 Arntz, M., T. Gregory and U. Zierahn (2016), “The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis”, OECD Social, Employment and Migration Working Papers, No. 189, OECD Publishing, Paris. Read report... 9 “From brawn to brains - The impact of technology on jobs in the UK” David Sproul, Angus Knowles-Cutler, Harvey Lewis, Deloitte LLP (January 2015). Read report...

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Baker McKenzie’s Global Employer Magazine. Guenther Heckelmann The latest edition looks at important and interesting developments that took place around the world in 2016 Partner and previews anticipated changes for 2017. We give Global Chair of Employment & Compensation Group recommendations and tips on how global employers Baker McKenzie should operate in light of these developments. +49 69 2 99 08 142 Baker McKenzie’s Global Employer Monthly eAlert. [email protected] Sign up for regular updates, designed to keep our clients and friends ahead of the curve on legal developments in labor and employment law around the world. Baker McKenzie’s Global Employment & Compensation thought leadership: • Labor Relations Report • Business Transformations Report • Global Mobility Report • Managing Risk: International Labor and Human Rights • How Megatrends will change the way we work: - How Demographics will change the way we work - How Technology will change the way we work - How Economics will change the way we work The art of the modern carve-out: These deals can generate a lot of value. But there are many pitfalls, especially when the transaction involves Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the terminology commonly used in professional service organizations, reference to a “partner” means a person who is a member, partner, or employees based in several countries. equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm. This may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome. © 2017 Baker & McKenzie. All rights reserved. Sign up for other publications from Baker McKenzie.

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